Natural Gas Falls as Ike to Move South of Gulf Production Areas

By Reg Curren

Sept. 10 (Bloomberg) -- Natural gas futures fell as Hurricane Ike moved into the Gulf of Mexico on a course that will likely take it south of offshore production platforms.

``There's really not much to drive gas right now,'' said Phil Flynn, senior trader at Alaron Trading Corp. in Chicago. ``It doesn't look like Ike is going to be as bad as people thought.''

Ike's projected path takes it to south Texas, though its possible strike area envelopes most of the state's coast and a small portion of Mexico, the National Hurricane Center said. About 65 percent of offshore gas production is still shut because of Hurricane Gustav, which moved through the region last week.

Natural gas for October delivery dropped 5.9 cents, or 0.8 percent, to $7.476 per million British thermal units at 9:23 a.m. on the New York Mercantile Exchange. The heating and industrial fuel has declined 45 percent from a 30-month closing high of $13.577 on July 3.

``Prices are under pressure as Ike's path moves away from the energy area,'' said Michael Fitzpatrick, vice president for energy risk management at MF Global Ltd. in New York.

Anadarko Petroleum Corp. said yesterday it planned to have all of its workers removed from Gulf platforms by today. Royal Dutch Shell Plc expected to evacuate about 240 workers by tomorrow. The Gulf offshore region produces about 14 percent of U.S. gas supplies.

Workers were removed from 167 production platforms, or about 24 percent of manned operations in the Gulf, the Minerals Management Service said yesterday.

Ike was a Category 1 storm on the 5 step Saffir-Simpson scale of intensity, with sustained winds of 85 miles (140 kilometers) per hour, the Miami-based Hurricane Center said in an 8 a.m. bulletin. Ike was about 430 miles southeast of the mouth of the Mississippi River and may become a major storm as it reaches the central Gulf.

Hurricanes Katrina and Rita damaged offshore production and pipelines in August and September 2005, sending gas futures to a record $15.78 per million Btu the following December.

To contact the reporter on this story: Reg Curren in Calgary at rcurren@bloomberg.net